Privatisation of Non-Strategic PSUs: Government to retain 4 PSUs in Strategic Sectors; New CPSE Policy Soon

PSU Privatisation: Government to soon privatise PSUs in non-strategic sectors. Also, the strategic sectors in India will not have more than 4 CPSEs. All other sectors will be privatised. Check what are Strategic and Non-strategic Sectors PSUs and other details.

Created On: May 19, 2020 10:58 IST
PSU Privatisation
PSU Privatisation

PSU Privatisation Policy: Finance Minister Nirmala Sitharaman on May 17, 2020 announced that the government will retain maximum of four Central Public Sector Enterprises (CPSEs) in Strategic Sectors and all other Public Sector Undertakings (PSUs) in Non-Strategic sectors will be privatised with an aim to minimise the administrative cost of the Central Government. The announcement was made while the Minister revealed the final tranche of Rs 20 lakh crore Atmanirbhar Bharat package.

For this purpose, the government will soon frame a new Public Sector Enterprises Policy wherein the total number of PSUs in strategic sectors will be at least one and a maximum of four and the rest of the PSUs or PSUs in non-strategic sectors will be either privatised or merged or brought under the holding companies.

The new PSE Policy will categorise the sectors as Strategic and Non-Strategic ones. The strategic sectors will not have more than 4 CPSEs. If a particular strategic sector has more than 4 PSUs, then either they will be merged or privatised so that the total number remains four and not more than that.

What is Privatisation?

As the term suggests, Privatisation means migration from the Public to Private Sector through the transfer of ownership, management and control. In India, privatisation is aimed at improving the inflow of Foreign Direct Investment (FDI) or investment in sectors that require technological advancements, thereby directly providing a boost to Economy.

Public Sector Enterprise Policy to be launched soon: Key Details

India currently requires a coherent policy where majorly all sectors are open to privatisation and Public sector will play a vital role in defined sectors. The new Public Sector Enterprise Policy will be focussed to serve this need. The new policy will be framed on the basis of following factors:

  • List of Strategic Sectors that require presence of PSU
  • Minimum 1 PSU will be required in Strategic Sectors and Private sector will also be allowed
  • In rest all other sectors, PSUs will be privatised on the basis of feasibility
  • At least 1 and Maximum 4 PSUs to be limited in Strategic sectors

Objective behind PSU Privatisation

- Minimise the administrative cost of the Central Government

- Boost the CPSE Disinvestment programme of the central government

What are Strategic Sectors PSUs in India?

Earlier, the strategic sectors were defined on the basis of industrial policy. Government classified Central Public Sector Enterprises (CPSEs) as ‘strategic’ and ‘non-strategic’ on the basis of industrial policy that keeps on changing from time-to-time. According to this, the Strategic sector PSUs were:

  1. Arms & Ammunition of defence equipment
  2. Defense aircraft & warships
  3. Atomic energy
  4. Applications of radiation to agriculture, medicine and non-strategic industry
  5. Railways

What are Non-strategic Sector PSUs in India?

All other PSUs apart from the strategic sectors fall under Non-strategic Sector including Power Distribution Companies, Discoms

What are Central Public Sector Enterprises (PSEs) or Public Sector Units (PSUs)?

Companies in which Central Government or a CPSE holds 51% stake or direct holding are known as Central public sector enterprises (CPSEs) or Public Sector Units (PSUs). In India, CPSEs hold key position in sectors like Petroleum, Banks, Coal, Power, Steel and Mining such as SBI in Banking sector; LIC in life insurance; Coal India Limited in coal sector and others.

How many PSUs are there in India?

There were around 300 Public Sector Enterprises (PSEs) in India as on March 31, 2019 with a total Rs 16,40,628 crore investment, Rs 2,75,697 crore paid-up capital and over 15 lakh employees. Have a look at number of PSUs in a few defined sectors:


Number of PSUs


9 (Including 2 acquired by NTPC)


13 (including 3 under ONGC)




11 (Including 8 subsidiaries of Coal India Limited)



Civil Aviation




 Watch this space for more updates on privatisation of PSUs in Non-strategic Sectors.

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